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Tsipras Should Take No for an Answer
In today’s Daily Shot, this paragraph describes what’s happened since I last wrote about Greece:
First, [Greek Prime Minister Alexis Tsipras] left bailout negotiations, insisting on a public referendum on the conditions Greece’s creditors were demanding. Then he let his nation go into default on its debt payments. Then, he suddenly realized how bad an idea that was, so he wrote a letter late Tuesday to other European leaders and the IMF, accepting the terms of their bailout. Then he started telling his voters to reject the measure.
I think the truth is worse than the paragraph suggests. Mr. Tsipras didn’t even accept the terms of the bailout. He made several modifications that were virtually a counter-proposal. The EU rejected this because it was a significant change in plans.
But the bigger issue is whether any commitment made by the Greek government can be relied upon. As Anil Kashyap of the University of Chicago notes, the behavior of the Europeans strikes one as an attempt to get out of the relationship, and this has been so since 2010. Tsipras wasn’t in power then, but the previous government never carried through with the program. Tsipras came to power in 2015 because the previous government had actually balanced the budget but got 25 percent unemployment for its troubles.
Tsipras was sent to make a new deal but, as Kashyap notes, most of the concessions the EU has made have been relatively minor. The Germans have insisted “a deal’s a deal,” and are now daring the Greeks to go ahead with their referendum.
The Daily Shot is correct in observing that Tsipras is behaving badly, in that he’s veering back and forth. It seems incorrect to me to suggest, however, that the referendum is a bad idea. It’s not. The referendum is about the euro, which is still quite popular. Tsipras’ mistake was to offer to short-circuit the referendum in return for a small negotiation over the terms of a loan program that has failed to grow Greece. Were he more mature, he’d stand aside until Monday, let the country understand its dilemma, and choose.
Published in Economics, Foreign Policy, General
The Euro may be popular in Greece but the actions necessary to stay in it are not. How is that circle squared?
I don’t think the criticism that this referendum is an utter legal mess should be dismissed. The referendum may indeed be a good idea, but not one so apt to create further dispute about the legitimacy of the result. Greece descending into total civil chaos is precisely the last thing the world needs on the Mediterranean. A Greek friend posted this on his Facebook page today:
He’s been working with the UN support mission in Libya since we toppled Gaddhafi. I don’t think that’s a warning to be taken lightly, coming from him.
A referendum may have been a good idea a few months ago, but now it smacks of a delaying tactic. Its like after working hard all day to get a strike price on any contract with a deadline, you just get up and say you have to discuss this with the wife (or husband) and will return after the deadline passes.
Tsipras, like Iran, thought every day of status quo without a bargain is a good day. He must have thought the EU would just merrily continue on lending another billion Euros a day under the emergency facility.
That’s reputedly what happened —the scuttlebutt in Paris, anyway, is that Spiras’s wife threatened to leave him if he surrenders to Europe.
Sounds like Alger Hiss’ wife.
I love this. The Greeks (and the EU) are both getting exactly what they deserve. It couldn’t happen to a nicer bunch of socialists and they won’t be last to come a cropper.
Syriza was on the verge of splitting between radical leftists and hard-core radical leftists over the continuing negotiations with the Troika. The referendum (which asks confusing and badly translated questions about whether to accept a creditors’ offer that was never finalised and is no longer on the table) was designed to unite Syriza by dividing Greece. The whole thing will, however, blow up in PM Tsipras’ and Finance Minister Varoufakis’ faces if the vote is ‘Yes’.
It is not easy for an Anglosphere conservative to know what he would do. A ‘No’ result probably means that Greece will exit the Eurozone (almost certainly a good thing in the longer term) but the Syriza government may survive thereby putting the country’s necessary economic reforms beyond reach. A ‘Yes’ vote probably means that the Syriza government will fall but the country will remain locked into the Eurozone at least until the ongoing debt crisis inevitably next erupts.
Unfortunately for Greece, there is no conservative party that rejects Eurozone membership in favour of national monetary sovereignty (the small ‘Independent Greeks’ party that support returning to the drachma are not conservatives, but economically illiberal right-wing populists).
The Greeks unfortunately don’t have anything equivalent to the UK Tories.
Do you love it as much when you replace the words “The Greeks and the EU” with “the Western world?”
When the Western World runs out of other people’s money then this is exactly what I expect to happen. It will be what is deserved.
Tsipras was apparently under the illusion that he was bargaining with Obama!
Let me comment on a couple of points:
I really don’t think you can hang much on the slender reed of the EU’s claim of a minimum electoral period for a referendum. The opinion is not of an uninterested party. The question is of keen interest to voters and there is plenty of information out there. It was voted on by the country’s parliament after a daylong debate that at one point put the referendum in doubt.
I think this is spot-on and the reason I wish Tsipras would ride this out. The yes vote will not bring a government that will do anything more than artful can-kicking. A no vote makes it plain to Europe that Greece is an unfit partner in its pan-European project. In my mind it hastens the reform of the eurozone to perhaps a two-speed northern-euro and southern-euro. The PIIGS can’t do this without a crisis first, and better to do it with Greece than any of the larger piggies.